Natural gas stockpile declines at above-average rate

Stockpiles of natural gas stockpiles declined at an above-average pace last week as furnaces ran nonstop to combat a blast of arctic weather.

U.S. inventories dropped by 231 billion cubic feet to 2.191 trillion in the seven days ended Jan. 24, based on the median of 11 estimates by analysts.

That drop compares to the five-year average decline for the week is 162 billion, according to the U.S. Energy Information Administration, which is scheduled to release its weekly stockpile report this morningin Washington.

Gas futures topped $5 last week for the first time since 2010 and spot gas prices in the Northeast surged to all-time highs as frigid air moved in.

Natural gas for February delivery rose 13.5 cents, or 2.7 percent, to $5.168 per million British thermal units at 11:17 a.m. on the New York Mercantile Exchange. Prices jumped to $5.442 on Jan. 27, the highest intraday price since Feb. 16, 2010. The futures have climbed 22 percent this month, the biggest gainer in the Standard & Poor's GSCI commodity index.

Spot gas at the Transco Zone 6 hub for New York City surged to $135 per million Btu on Jan. 21 on the IntercontinentalExchange, while prices at Algonquin City Gates, which includes Boston deliveries, climbed to $95.

Both were the highest intraday prices in records going back to 2005, exchange data compiled by Bloomberg show.

'Epic' withdrawals

About 49 percent of U.S. households use gas for heating, with the biggest consumers in the Midwest and Northeast, EIA data show.

The cold weather may cause gas stockpiles to drop by more than 200 billion cubic feet in the next two to three weeks, Yuen said. He cut his end-of-March inventory estimate to 1.164 trillion cubic feet, almost 700 billion below the five-year average, versus a Jan. 22 estimate of 1.256 trillion.

Supplies were 13.2 percent below the five-year average in the last week's EIA report and 19.8 percent lower than year- earlier levels.

"The withdrawals from storage over the next couple of weeks will be epic, if not records," John Kilduff, partner at Again Capital LLC and editor of Energy OverView newsletter, wrote in a note to clients Tuesday. "The impressive demand should remain with investors' collective memories, not allowing a large pullback for a while."